*Black-magic dollars
*By The Mogambo GuruAs usual, I put on an adult-sized diaper and my tinfoil hat in careful
preparation to look at the change in Total Fed Credit last week, and it is a
good thing I did, too, because the Federal Reserve (as expressed in their
secret motto "We Are Evil") created, out of thin air, a new US$29 billion in
bank credit <http://www.atimes.com/atimes/Global_Economy/KD24Dj01.html#>!
Wow!
The interesting part is that the Federal Reserve used that new money - and a
lot more - to buy $62 billion of US government
debt<http://www.atimes.com/atimes/Global_Economy/KD24Dj01.html#>last
week! Hahaha! What a fraud! $62 billion! In one week! We are so
freaking doomed!
Now, if you are having a hard time understanding my words because I am so
outraged that I am actually incoherent, or you are disgusted by the way
drops of frothy spittle fly from my
<http://asianmedia.com/GAAN/www/delivery/ck.php?n=a53e495a&cb=INSERT_RANDOM_NUMBER_HERE>
hysterical lips as I loudly scream, scream, scream, "We’re freaking doomed!"
what I am trying to say is that all of the economic problems we have, and
all of the economic problems of everyone around the world, were caused by
former Fed chairman Alan Greenspan creating what was, back then, a
staggering $10 billion a month in more Total Fed Credit, which was then
multiplied dozens of times over by the
banks<http://www.atimes.com/atimes/Global_Economy/KD24Dj01.html#>and
financial centers, and which drove up asset prices so high that they
are
now falling, to the dismay of people who own assets and the greedy
government which rakes off a nice Chunk Of Change (COC) from those assets.
And now here - here! - is Greenspan successor Ben Bernanke’s monetary
insanity to create, in One Freaking Week (OFW), $62 billion whereas it took
old Greenspan an entire month to come up with $10 billion! Yow! This is
indeed insanity!
And how did the loathsome Greenspan accomplish such horrific feats? Easy! He
used the power of the Federal Reserve to create money out of thin air, year
after year, for almost two continuous decades, which appeared as a credit on
the books of the banks, ready for
lending<http://www.atimes.com/atimes/Global_Economy/KD24Dj01.html#>,
which the banks then loaned out as Huge Freaking Multiples (HFM) of that
money! And it just kept on going like that, year after year!
And then the money - all that money, all that staggering tonnage of dollars
- eventually ended up in the hands of ultimate American consumers, who used
the money to buy consumer stuff from overseas, creating a trade deficit, so
that foreigners ended up with all those dollars, which those governments had
to "monetize" by creating more of their own
currency<http://www.atimes.com/atimes/Global_Economy/KD24Dj01.html#>to
keep their money from getting scarce in relation to the absolute glut
of
Greenspan’s dollars flooding the world, all of which is the fabled "savings
glut" that turned into a "savings inflow" into the United States, blamed by
the idiotic Bernanke for causing the housing boom! Hahaha!
As Daffy Duck would say, "What a maroon!"
And speaking of maroons, Bernanke, who saw none of this happening, recently
said that he sees "tentative signs that the sharp decline in economic
activity may be slowing", which made me laugh for many reasons, firstly
because an idea for a witty Mogambo Editorial Cartoon (MEC) flashed into my
mind.
In the MEC, a man has fallen from the top of a skyscraper, and as he plunges
down, Bernanke shouts, "Flap your arms! Flap! The little bit of lift will
slow your descent, and we will see signs that your sharp decline may be
slowing!"
Well, even though my wonderful idea is so marvelous that it would have been
the obvious winner of a Pulitzer for "Best Editorial Cartoon", the idea did
not even get off the ground, as I kept being distracted by the question,
"Why did this guy fall off the building?"
Then I decided that he fell while trying to escape government predators, so
I had to draw a bunch of people labeled "government" looking down from the
top of the building and saying, "We know you have lost your job and your
house, and that half of your retirement savings
<http://www.atimes.com/atimes/Global_Economy/KD24Dj01.html#> and other
investments are gone, prices for everything are rising, and you are
desperate ... But we need to raise your
taxes<http://www.atimes.com/atimes/Global_Economy/KD24Dj01.html#>!
A lot!"
Then I decided it needed "something". So I thought to add some naked ladies
because I like naked ladies, but I couldn’t decide how to actually work that
into the theme of the cartoon, even though they all had that seductive,
"come hither" look in their eyes and were saying, "I want you, Mogambo! Take
me!" which suggested the seductive "free lunch" promises of Congress and the
Federal Reserve, which was another way to go.
And then this "free lunch" thing brings up the grim fact that the national
debt has shot up over $11.2 trillion, thanks to the Federal Reserve creating
the money so that the government could spend it!
So, instead of working on some stupid cartoon, I decided to just grab you by
the collar and shout, "We’re freaking doomed by a spendthrift Congress
spending tons of new money created by the evil Federal Reserve!" into your
terrified face; but I realized this will never suffice to convince you of
the terror, especially with you wriggling and struggling to break free from
my Powerful Mogambo Grip (PMG), so I will give you some actual numbers,
which ought to make you feel better because it makes me look like I am an
idiot.
As a guy who spends a lot of his time being outraged and vocal about how
inflation in prices is going to destroy us all as a result of all of this
global creation of money, it was particularly surprising to me when I first
read the Associated Press report that "Over the past 12 months, consumer
prices have fallen 0.4 percent, the first 12-month decline since a similar
drop for the year ending in August 1955."
So, my face is red, and I hear you say, "Prices are going down! It’s a
deflation! So let go of me, you Stupid Mogambo Idiot (SMI)!"
Well, the joke is on you, as prices really aren’t going down as, "Core
inflation, which excludes energy and food, rose 0.2 percent last month,
matching the gains of the past three months", and in fact, "Over the past 12
months, core inflation has risen 1.8 percent."
And inflation in prices is going to get a lot worse, as the loathsome and
thoroughly despicable Federal Reserve is
financing<http://www.atimes.com/atimes/Global_Economy/KD24Dj01.html#>the
absurd stimulus programs of Barack Obama so much that (audience shouts
out, "How much, Marvelous Mogambo Master (MMM)?") on Wednesday, April 15,
the national debt was $11,218.8 billion, while on April 8, One Freaking Week
(OFW) earlier, the debt was $11,145.4 billion, which is not only $73.4
billion more, but is also a Hell Of A Lot Of Money (HOALOM) in OFW!
And thus we are naturally led to the point where I tell you, with sincerity
in my voice and a crazed look in my eyes, that HOALOM in OFW means that if
you are not buying gold, silver and oil in response to such monstrous fiscal
and monetary irresponsibility and outrageous insanity, then there is
something very, very wrong with you, and you deserve the ruinous punishment
that will be inflicted on you very, very soon.
*Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on
those who desperately deserve it.*
(Republished with permission from The Daily
Reckoning<http://www.dailyreckoning.com/index.html>.
Copyright 2009, The Daily Reckoning.)
<
*THE COMPLETE MOGAMBO GURU*<http://www.atimes.com/atimes/others/mogambo.html>
1. China unveils its new naval
clout<http://www.atimes.com/atimes/China/KD23Ad01.html>
2. The strange case of Roxana
Saberi<http://www.atimes.com/atimes/Middle_East/KD23Ak01.html>
3. Why the West is Boyle'd<http://www.atimes.com/atimes/China/KD21Ad01.html>
4. The Chinese are not happy<http://www.atimes.com/atimes/China/KD23Ad02.html>
5. The roots of Thailand's
tension<http://www.atimes.com/atimes/Southeast_Asia/KD23Ae03.html>
6. Ambush deep in the valley of
death<http://www.atimes.com/atimes/South_Asia/KD22Df02.html>
7. Yuan trade move 'far
reaching'<http://www.atimes.com/atimes/China_Business/KD21Cb01.html>
8. Cambodia, Vietnam re-affirm their
vows<http://www.atimes.com/atimes/Southeast_Asia/KD23Ae01.html>
9. Birds best kept in
hand<http://www.atimes.com/atimes/Global_Economy/KD22Dj01.html>
10. Staring at the sun in
Afghanistan<http://www.atimes.com/atimes/South_Asia/KD23Df01.html>
(24 hours to 11:59pm ET, Apr 22, 2009)
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